SACRAMENTO — Reacting to a gaping $11.2 billion hole in the California state budget he signed just six weeks ago, Gov. Arnold Schwarzenegger today announced a proposal to raise the state sales tax by 1.5 cent.
In addition, he proposed implementing a brand new tax on services, such as those offered by veterinary clinics, auto repair and golfing fees. He also plans to implement a tax on producers that extract oil from California ground, and increase alcohol excise taxes by five cents a drink His tax package would bring $4.7 billion new revenue. Most of the rest of the budget shortfall would come in the form of cuts to education, prisons, public safety, Medi-Cal and social services.
Although the Republican governor spent the spring and summer telling Californians the state suffered from a spending problem that led to a $15 billion budget deficit, the world economic downturn has since pushed the state into having a revenue problem.
"A drastic situation like this," Schwarzenegger told a news conference, "takes drastic measures."
Anticipating the tax proposal, Republican legislative leaders this week said they would oppose any such plan. Schwarzenegger, however, was hopeful lawmakers would understand the unprecedented situation and vote to revise the budget.